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Wits Gold to tap shareholders R50m
David McKay
Posted: Tue, 08 May 2007

[miningmx.com] -- WITWATERSRAND Consolidated Gold Resources (Wits Gold), the JSE-listed gold exploration firm, would need to raise R50m to pay for two years of exploration costs.

Wits Gold owns an estimated inferred resource of 159.7 million ounces of gold and 136.3 million pounds of uranium in nine prospecting rights in the Potchefstroom and southern Free State regions.

The company currently has about R35m in cash.

Plans for a North American listing were behind schedule, said Watchorn. The company had so far spent nearly R10m attempting to get Wits Gold a secondary listing on an international exchange, it said in notes to its full-year results ended-February.

Watchorn conceded to frustration when dealing with potential South African shareholders. "When we do the share placement, we'll spend a day in Johannesburg and a day in Cape Town. But that will be just a courtesy.

"Historically, there's been little response from South Africa funds for whatever reason," he said.

Wits Gold has raised R40m in the past in two raisings: at its listing in April 2006, of about R8m, and a further R30.7m in October 2006 in a private placement to shareholders.

Plans to begin a prefeasibility study were being set out at the company's De Bron resource in the southern Free State. "There's probably about one more borehole to drill and then we hope to start a prefeasibility study in the third quarter," he said.

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Wits Gold reported an operating loss increase of R14.6m for the 12 months ended-February owing to higher employment costs, an investor relations programme, and expenditure relating to the secondary listing on the international exchange.

Wits Gold's share ended nearly 1.7% weaker at R115/share. However, the share is 52% stronger since the beginning of the year.

Nonetheless, the company has been criticised by analysts in the past who believe that it has no intrinsic value because most of its gold resources cannot be mined profitably. Wits Gold has argued it is an option on the gold price.

Watchorn said the company had not received credit for its uranium resources. He believed that at an uranium price of about $80/lb, some 2g per in situ tonne was added to the company's gold resources. "The potential has to come from the ability to mine both commodities," he said.